Wednesday, July 16, 2014

Contrarian stock bought July 2014: IBM


IBM, an American IT service company

I found it very difficult to decide which stock to buy this time. Not because there were no options but because there were too many options and companies that I wanted to buy. In the end it became IBM due to:
  • This company is extremely innovative. In my field they every now and then comes up with inventions where you just go Wooow! How did they manage to do that?
  • They are an American giant with insane earnings that are currently traded at a very fair value based on P/E see the analysis of IBM 2014.
  • They buy back shares which gives me increased value without taxation (15% on dividends from the US)
  • The dollar is in my opinion currently weak and will become stronger against the euro but it will take time. In the meantime it can be nice to pick up some fairly valued American giants. See my € vs $ reflection article.
  • Berkshire Hathaway own shares in IBM (see Berkshire Hathaway - Warren Buffett Q1 2014) and the other company that I co-own with Warren namely MüRe (see analysis of Münchener Rückversicherung (MüRe) 2014) has performed very well over time.
The investment became a normal starting position so I bought 8 shares at the price per share of 138.89 € when I include the trading fees and in total 1111.1 € was converted from cash to ownership in a great American company. Needless to say that it will be a very long term investment.

With the next update of the monthly report the new change will be brought in to the Stock Portfolio.
 

2 comments:

PoomK said...

Good choice. This could be another reason to support the long position:

http://www.forbes.com/sites/anthonykosner/2014/07/16/apples-partnership-with-ibm-is-about-the-victory-of-design-over-data/

Fredrik von Oberhausen said...

Thanks for the very interesting article PoomK!

Now I only hope that price does not run away too much because I wanted to buy some more to have a slightly larger position.